Monthly Archives: December 2009

Audit committee self -assessment

The AICPA recently published an article:  Self-Evaluation: A Primer for Audit committees.  It discusses how Audit committees should consider conducting an annual comprehensive self-evaluation of their performance and effectiveness. The audit committee’s self evaluation should employ a straightforward approach that will aid the committee in assessing its strengths and lay a foundation for future improvement.  To read more click below:

http://www.aicpa.org/download/audcommctr/Audit_Comm_dec09_linked.pdf

Another CPA firm is de-registered from the PCAOB and charged with fraud.

Another CPA firm is de-registered from the PCAOB and charged with fraud.  Issuers should be careful when selecting a PCAOB registered auditor.  Selecting the “low priced” auditor will often result in low quality service, issuer restatements and issuer reaudits costing the issuer more money in the long run and possibly damaging trading prices of the issuers capital stock.  Below is the summary disciplinary proceeding posted yesterday by the PCAOB and a link to the PCAOB website with the full story.

ORDER INSTITUTING DISCIPLINARY PROCEEDINGS,
MAKING FINDINGS, AND IMPOSING SANCTIONS

In the Matter of The Blackwing Group, LLC and Sara L. Jenkins, CPA, Respondents.
PCAOB Release No. 105-2009-007
December 22, 2009

http://www.pcaobus.org/Enforcement/Disciplinary_Proceedings/2009/12-22_Blackwing.pdf

SEC abandons surprise audit rule for certain advisers

The Securities and Exchange Commission dropped a proposal to require additional audits for investment advisers whose only fees are deducted from client accounts. The SEC also approved revised regulations that do not call for the audit of advisers that do not have custody of assets. Earlier this year, the AICPA made specific recommendations to the proposed rule amendments, including that the focus of the applicability of the surprise examination requirement be on advisers posing the greatest degree of risk. (Source: The Washington Post)

House Passes Sweeping FInancial Reform

The U.S. House of Representatives on Dec. 11 adopted a sweeping financial regulatory reform bill, “The Wall Street Reform and Consumer Protection Act of 2009,” by a vote of 223 to 202. The bill would create a new Consumer Financial Protection Agency, under which CPAs who provide financial planning, tax planning and tax return preparation, as well as financial literacy education to consumers, would not be subject to new and duplicative CFPA regulation under a provision won by the AICPA. In addition, the bill gives the Public Company Accounting Oversight Board authority to inspect or exempt auditors of introducing broker-dealers through a regulatory process and exempts non-accelerated filers with market values below $75 million from Sarbanes-Oxley Section 404(b) internal control  (Source:  The CPA Letter)

Now onto the Senate.  The Senate is working on its own version of the package.

FASB Codification Article from AICPA

FASB Accounting Standards Codification:

A Primer For Audit Committees

This major restructuring of accounting and reporting standards is designed to simplify user access to all authoritative GAAP.

What is FASB Accounting Standards Codification?

The Financial Accounting Standards Board’s Accounting Standards Codification (FASB ASC) represents a major shift in the organization and presentation of U.S. generally accepted accounting principles (GAAP). This major restructuring of accounting and reporting standards is designed to simplify user access to all authoritative GAAP by providing the authoritative literature in a topically organized structure.

What steps were taken to achieve FASB ASC?

FASB ASC disassembled and reassembled thousands of nongovernmental accounting pronouncements (including those of FASB, the Emerging Issues Task Force, and the AICPA) to organize them under approximately 90 topics and include all accounting standards issued by a standard setter in levels A–D of the current U.S. GAAP hierarchy. FASB ASC also includes relevant portions of authoritative content issued by the SEC, plus selected SEC staff interpretations and administrative guidance issued by the SEC.

What else do I need to know about FASB ASC?

FASB ASC is not the offi cial source of SEC guidance and does not contain the entire population of SEC rules, regulations, interpretive releases and staff guidance. Moreover, FASB ASC does not include governmental accounting standards. ASC is not intended to change U.S. GAAP or any requirements of the SEC.

Among other things, the FASB ASC project aims to:

• Reduce the time and eff ort required to solve an accounting research issue

• Mitigate the risk of noncompliance with standards through improved usability of the literature

• Provide accurate information with real-time updates as new standards are released

• Assist FASB with research and convergence eff orts required during the standard setting process

• Become the authoritative source of literature for the completed XBRL taxonomy

When will this have an impact on my company?

On June 3, the Financial Accounting Standards Board announced it is officially launching the FASB Accounting Standards Codifi cation™ (FASB ASC) on July 1. The codifi cation will be eff ective for interim and annual periods ending after September 15, 2009 – meaning preparers must start June 2009

AUDIT COMMITTEE BRIEF
From the Audit Committee Effectiveness Center 2510-347

DISCLAIMER:
This publication has not been approved, disapproved or otherwise acted upon by any senior technical committees of, and does not represent an offi cial position of, the American Institute of Certifi ed Public Accountants. It is distributed with the understanding that the contributing authors and editors, and the publisher, are not rendering legal, accounting, or other professional services in this publication. If legal advice or other expert assistance is required, the services of a competent professional should be sought.

© 2009 The American Institute of Certifi ed Public Accountants